Social Phenomena and the Transformation of Business Processes

In Groundswell, Charlene Li and Josh Bernoff show us how companies can use customer communities as a method to generate revenue and deliver better services.  Customers contribute to online ratings and reviews, support forums, and also provide feedback for product development; these are important elements that allow companies to gain insight and energize their customers.

Purchase decisions are influenced by reviews.

The authors discuss the significance of energizing the groundswell through product reviews.  Oftentimes online transactions can be an unsettling process for some consumers who are insecure about not being able to touch the product before they buy it.  When customers are prompted to write reviews for products, this demonstrates how people can depend on other people and how reviews can influence sales.  Companies can target specific audiences by energizing the consumer “critic activities” and thus in turn influence the content viewed by the “spectators.” Forrester surveys show that 96 percent of customers use online reviews to help them make purchases (page 138).  It is interesting to note, however, that it is difficult to identify a direct relationship between reviews and sales; those who read reviews are generally more interested, which contributes to their willingness to purchase.  

The use of support forums to answer questions is another interesting method that is used to increase customer satisfaction.  When properly managed, support forums allow for customers to help each other; consumers who are passionate and well versed with a particular product or brand can provide very valuable answers and advice.  The dedicated forum responders help companies save hundreds of thousands of dollars in customer service calls (page 162).  Also interesting is the forum responders’ receipt of what the authors refer to as “psychic income.”  While I (and most other practical people) prefer the more traditional “money” income, these altruistic forum participants answer questions for the gratitude, validation, and the feeling of influence.  

So nice of you to help! Can I pay you in Monopoly money?

Another method used to energize the groundswell is when companies provide the opportunity for consumers to be involved with product development.  The authors describe an interesting case study where the Canadian grocery chain Loblaw listens and responds to customer feedback (page 192).  Making improvements based on customer suggestions is baked into the process at Loblaw, and failed products are seen as an opportunity to try again.  The company takes feedback and delivers it directly to the product developers; many products are improved after the developers analyze, reformulate and rerelease.  This is a novel way of producing products that are directly aligned with customer demand, and it also improves the corporate-consumer dynamic by empowering the buyers.

If your dog could eat ANYTHING for breakfast, what would it be?

Li and Bernoff have shown us how social media have tipped the balance of consumer relations.  Customers are more empowered and they can wield control by writing reviews, giving and receiving support, and affecting product development.  It is the dawn of a new era of existence in a capitalistic society; the consumers who were once powerless recipients of goods are now active participants in the buying, servicing, and development of products.